Ten Years after the Global Financial Crisis: An Introduction
| DOI | http://doi.org/10.1111/1758-5899.12572 |
| Published date | 01 June 2018 |
| Author | Helmut K. Anheier,James A. Haley |
| Date | 01 June 2018 |
Ten Years after the Global Financial Crisis: An
Introduction
Helmut K. Anheier
Hertie School of Governance
James A. Haley
Centre for International Governance Innovation
The Global Financial Crisis was a truly momentous shock to
the global economy. In the autumn of 2008, global output,
employment and trade were in free fall as financial markets
around the world seized-up in dysfunction and credit
ceased to flow. Indeed, the Global Financial Crisis of 2008–9
was the greatest economic shock since the Great Depression
of the 1920–30 and the greatest challenge to social and
political systems since the Second World War. It put not
only financial markets and currencies at risk; entire econo-
mies and political systems were stressed as the financial cri-
sis soon revealed major shortcomings and weaknesses in
public finances and monetary policy (e.g., the subsequent
Euro crisis).
Like the Great Depression, the Global Financial Crisis
2008–9 was a watershed event. And like the Great Depres-
sion, it led to a fundamental review of financial regulation,
both in economies in the epicenter of the crisis and those
on the periphery. The crisis also had profound conse-
quences in other policy fields, as public finances deterio-
rated with the costs of the crisis, and labor markets coped
with rising unemployment, among others. The globalization
process seemed in jeopardy, and the so-called Washington
consensus policies broken.
But unlike the 1930s, responses to improve international
fiscal and monetary governance took place in a much more
coordinated fashion. As the extraordinary challenges the
mounting crisis presented became clearer, on 8–9 Novem-
ber 2008, leaders of the world0s 19 largest economies plus
the European Union, assembled in Washington. The institu-
tionalization of the G20 that resulted from the meeting
made it the premier forum of international cooperation (ac-
cording to the Pittsburgh Communique of the G20, Pitts-
burg Summit, 24–25 September 2009). Many other meetings
followed, with the goal of enhancing international macroe-
conomic and financial cooperation.
Governments around the globe orchestrated joint efforts
to arrest the collapse in economic activity. G20 governments
agreed to a three-point program: central banks were to pro-
vide liquidity to stem the panicked flight from financial mar-
kets; governments eschewed pro-cyclical fiscal responses,
allowing automatic stabilizers to operate and providing
coordinated fiscal stimulus to offset the contraction in
private spending and investment; and G20 members agreed
to resist protectionist trade actions. Together, these mea-
sures averted a spreading economic and social crisis that
could have easily resulted in a global disaster. The crisis was
contained, but many countries nevertheless experienced
deep recessions and tepid recoveries that greatly aggra-
vated underlying monetary, fiscal and structural problems.
The trauma of the Global Financial Crisis also left last-
ing scars on the individuals whose lives were adversely
affected by unemployment and economic insecurity; and
it frayed the social fabric in many countries. The social
and political effects of this trauma continue to play out.
At the same time, the crisis has led to a critical evalua-
tion of pre-crisis policies just as the Great Depression
incited a vigorous debate of economic theory and the
government’s role in stabilizing the economy. This process
is necessary to avoid a repetition of the terrifying events
a decade ago.
Ten years after the dramatic events and rescue efforts,
important questions arise that are of primary significance to
policy makers and analysts alike:
•Looking back, were the measures put in place during and
in the aftermath of the crisis adequate?
•Looking forward, are they sufficiently robust to stave off
future crisis of the same kind and magnitude in economic
and political environment that has changed significantly
since 2008?
•Similarly, are post-crisis responses able to deal with the
impacts of other factors such as technological develop-
ment (e.g., digitalization), threats to multilateralism (e.g.,
looming trade wars and challenges to the WTO), and the
changed geopolitics generally?
Ten years provide sufficient distance from which a critical
reappraisal of policy frameworks can be undertaken, and les-
sons learned for policy makers and students of global
finance.
For this reason, the Centre for International Governance
Innovation and the Hertie School of Governance jointly
commissioned this special edition of Global Policy. As far as
we know, this is one of the first systematic attempts to
assess the lessons of the 2008–9 response to the crisis by
Global Policy (2018) 9:Suppl.1 doi: 10.1111/1758-5899.12572 ©2018 University of Durham and John Wiley & Sons, Ltd.
Global Policy Volume 9 . Supplement 1 . June 2018 5
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